WASHINGTON – The problems in the U.S. subprime mortgage market could spiral out of control into a global financial crisis, economist Mark Zandi said Thursday.

With a “high level of angst” in the financial markets about who will take the losses from more than $1 trillion in risky mortgages, we could be just one hedge-fund collapse away from a global liquidity crisis, said Zandi, chief economist for Moody’s Economy.com.

A global meltdown is not likely, but the risks are growing, Zandi emphasized in a conference call with reporters following the release of a new study on subprime debt that concludes that the housing crisis could be deeper and last longer than investors now believe.

And it could spread. “Mounting mortgage delinquencies and defaults now pose the most serious threat to the global financial system and economy,” Zandi said in his report.

Treasury Secretary Henry Paulson, an old Wall Street hand himself, tried to reassure markets with a mid-afternoon televised pep talk.

Lenders and borrowers should exercise more “discipline,” he said, and he repeated his view that any problems in the subprime market would be “largely contained.”

But Zandi and others say the problems are only beginning.

In a note to clients on Wednesday, Goldman Sachs chief economist Jan Hatzius said the housing correction could be less than half over, if history is any guide.

Zandi used another historical comparison: the Asian financial crisis of the late 1990s.

“Unlike the financial crisis of a decade ago, however, global capital would likely flow away from U.S. markets, not to them, as the genesis for the crisis lies within the U.S. financial system.”

After Bear Stearns was forced to write off the value of two large hedge funds that had invested heavily in securities backed by subprime debt, it could take just one more “Bear-like event” for the financial system to freeze up,

“If there’s another major hedge fund that does stumble, that could elicit a crisis of confidence and a global shock,” Zandi said. The potential “is quite high,” he said. He gave it a one-in-five chance.

Zandi said global financial conditions have been supported by strong growth and substantial liquidity, supercharged by “unprecedented risk tolerance.” But that’s changing. Global liquidity is drying up, with central banks tightening. And risk is being re-priced.

“The credit window is now closed,” wrote strategist Barry Ritholtz in his blog.

As for the U.S. housing market, Zandi expects a lot more pain, but not a recession.

Here are some highlights of his forecast, based on a study using anonymous data collected by consumer credit agency Equifax:

Home prices will fall 10 percent from the peak nationally, more in the bubble regions in California, Florida, Nevada, Arizona and Washington, D.C.

Home sales could bottom later this year, home construction could bottom early next year, and house prices could bottom late next year. It’ll be 2010 before the housing market could be termed “normal.”

About 17 percent of total mortgage debt is at risk, totaling about $2.5 trillion in subprime, Alt-A and jumbo debt. About $1.4 trillion is at serious risk of default. Investors will lose about $113 billion as $460 billion worth of mortgages default.

About 20 percent of the subprime loans written in the last half of 2006 will fail, with the peak of the defaults not coming until 2011. A “significant number” of these borrowers never made a single payment.

More than 2.5 million first mortgages will default this year and next year. Subprime borrowers will experience significant financial distress.

The U.S. economy will grow less than 3 percent annualized through the middle of 2009. A healthy job market should prevent a recession, although the jobless rate will likely rise to 5 percent from 4.5 percent by the end of the year.

Consumer spending has already slowed and will slow further.

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AP-NY-07-26-07 1803EDT

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